Bristol-Myers, Williams-Sonoma See New Year's Options Action
Old, familiar names and a few surprises showed up in the options market on the first day of trading in the New Year.
Trading higher than normal volume, the top stock on ThinkorSwim’s “Sizzle Index” was Bristol-Myers Squibb . The “sizzle index” identifies those stocks trading above normal volume in relationship to the overall volume of the market.
In this case, market watchers say that the spike in volume was due to the stock trading ex-dividend or, the last date at which shareholders of record are entitled to BMY’s $0.34 quarterly payout.
Deep in the money call option strategies are sometimes used by professional traders as a way to take advantage of that payout.
“If you have a long call going into the ex-dividend date, you want to exercise that call or you are forgoing the dividend,” says Tim Biggam, Trading Block Options Strategist. After that date “all things being equal, your option will be less by the value of the dividend,” he said.
Another unusual name for the options market was Williams-Sonoma . The stock traded a relatively small yet, higher than normal volume after an analyst at Janney Montgomery cut the underlying shares to a “sell” from a “neutral” rating. The analyst said in his note that “great companies are not always great stocks” and put its “fair value estimate” at $33 per share. The $38 calls expiring January 12th were the most actively traded options in the run.
Dominating the most actives list were large-cap stocks and ETFs according to Interactive Brokers. Some familiar large-cap names included Bank of America , Apple , Yahoo , JPMorgan and Research in Motion . S&P 500 Trust was the most actively traded ETF, followed by iShares Russell 2000 and Powershares QQQ Nasdaq 100.